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The week’s head-spinning moments: Chipotle insights, madness worries

1. Steve Ells gives an ops lesson

Restaurant investors weren’t known for their keen industry insight 10 or 15 years ago. As students of the companies where they’d parked money, they deserved more D’s than the remedial class of a reform school. Today, they’re more like Advanced Placement nerds, as Chipotle’s executives were reminded at a financial conference last week in Chicago. One of the dynamics portfolio managers wanted explained: How Chipotle had raised its throughput to what one analyst termed a “jaw-droppingly good” level.

Simple, said co-CEO-turned-professor Steve Ells. He explained the four keys to Chipotle’s ability to produce 350 customized orders in an hour at some stores. Those “pillars,” he said, come down to four items on a checklist:

  • Having an expeditor who excels;
  • Having a floater called a linebacker behind the prep line, ready to restock supplies or resolve a snag;
  • Having “aces in their places,” or ensuring that a team member with an extraordinary talent at a given process is assigned to that station;
  • Mise en place, or what chefs know as the slicing, dicing, peeling, pre-cooking and other prep work that’s done before a meal rush, so all they have to do is assemble components.

If all four of those components are in place, the store can serve 300 guests an hour with an ease that would surprise any onlooker, Ells said.  Indeed, he added, stores in Chicago and New York have an unofficial, ongoing competition as to who can process the most orders at lunch.

The challenge for the chain is making sure those four pillars are in place. “In some cases restaurants [or] field leaders have said, I’m doing four pillars in 100 percent of my restaurants,” said Ells. In reality, “Their rates were more like 40 percent or 50 percent. And it was eye opening. We have moved all of those execution figures from 40 to 60 percent up to 70 to 90 percent. That’s the single biggest change from last year to this year.”

In case you’ve forgotten, Chipotle posted a 13.4 percent leap in same-store sales for the first quarter.

2. Wendy’s smarts revealed

A show of hands: How many of you have as large of marketing budget as you’d like? You can put yours down now, McDonald’s.

Everyone else, including the other Paul Bunyans of the business, typically wants more and more and more. Why not? You can’t be too rich, too thin, or have too much money available for advertising and promotion.

One of the ways Wendy’s has deepened its kitty was revealed this week because of a ruling by the U.S. Department of Agriculture that had virtually nothing to do with the chain. A U.S. ranchers’ group had complained to Secretary Tom Vilsack that some of the promotional dollars they’re legally mandated to provide had been given to Wendy’s to tout the chain’s use of North American beef for their burgers. They argued that “North American beef” could encompass production from Canada or Central America.

The U.S.D.A. didn’t buy the argument, enabling Wendy’s to continue using a small contribution from the Beef Check-Off to promote its “100 percent pure North American beef that is always fresh and never frozen.”

3. Applebee’s new guest amenity

The general media all but frothed over Starbucks’ revelation this week that stores would install wireless phone rechargers for guests to use at no charge. Lost in the din was the recharging initiative quietly undertaken by another big brand, Applebee’s.

A franchisee in Hays, Kan., has agreed to become the chain’s first site for high-speed Tesla car-recharging stations.  Electric-vehicle recharging stations are common sites in restaurant parking lots, but the version from Tesla, the high-performance brand developed by PayPal co-founder Elon Musk, is still a badge of pack-leading innovation.

The company wants to create a network of refueling stops so drivers can zoom through a long road trip at a relative high speed. The plan calls in part for opening stations where the car’s engine is swapped out with a fully charged replacement at the push of a button and in a matter of minutes. In essence, Tesla drivers would become part of an engine-sharing network.

The Applebee’s rechargers aren’t that advanced. But they still bestow some bragging rights. And Tesla is promoting the location to consumers who’ve bought the company’s e-cars.

4. More food-scare madness?

There’s a real quirk to today’s consumers: They’re loath to eat anything that has even a remote chance of killing them.  That’s why heads should have spun like Tornado Alley weathervanes when news broke this week of beef being yanked from the restaurant supply chain as a precaution against Mad Cow Disease.

The recall was small, encompassing just two tons of rib-eyes and other cuts, and fears of a contamination have yet to be confirmed. But they’ve yet to be dis-proved, either. The meat apparently came from cattle that were adjudged to be at risk of the disease, though health inspectors stressed that the animals had shown no symptoms.

In case you missed the scares of more than a decade ago, Mad Cow Disease—technically Bovine Spongiform Encephalopathy, or BSE, is typically fatal.

Authorities revealed that some of the meat was headed for a restaurant in New York City and another in Kansas City, but did not divulge the names.

5. More reason to shiver: Sales sites for P.F. Chang’s data

It’s the equivalent of spotting your stolen car in someone else’s driveway with a For Sale sign on the windshield. Cyber-security sites have reported seeing material from P.F. Chang’s data breach on sale on the same backroom sites where the take from Target’s hacking had been peddled. Indeed, according to some of the blogs, that was how Chang’s learned of the data swipe. Yet the sites continue to function, undeterred.

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